Mortgage lenders who lobbied Congress more intensively earlier this decade made riskier loans, were more prominent in communities that ended up with higher delinquency rates and had stock prices that fared worse than others in the industry, a research paper by three International Monetary Fund economists says.

“The political influence of the financial industry can be a source of systemic risks,” the authors conclude. “The prevention of future crises might require weakening political influence of the financial industry.”
The research relies primarily on matching data on mortgages collected under the Home Mortgage Disclosure Act and data on delinquencies collected by a firm called LoanPerformance with lobbying expenditure reports filed with the U.S. Senate.

of the IMF Research Department say. After the housing bubble burst, they say, “delinquency rates are higher in areas in which lobbying lenders’ mortgage lending grew faster and, during key events of the crisis, these lending experienced negative abnormal stock returns.”

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